IT project failure costs Irish organisations €350m

15 Nov 2006

As much as €350m could be wasted on IT projects in Ireland and the real figure could actually be higher, a new report has found.

I.T. Alliance, the Irish outsourcing provider, has produced a study which estimates the amount of wastage on technology projects due to failed implementation. Moreover, this figure does not include projects that come in late or over budget.

A forecast from the research firm iReach puts the amount of IT spending in Ireland at €2.35bn for this year. I.T. Alliance then calculated the estimated waste on the basis of international research that between 5pc and 15pc of IT projects fail, which is itself a conservative figure.

According to Terence O’Donnell, who heads up the Project Management Centre at I.T. Alliance, the problem of failed IT projects is not restricted to the public sector. “While PPARS has got a lot of publicity, there is little evidence that the private sector is much better in successfully implementing major projects. The private sector may just be more skilled at killing off such programmes and burying them in unmarked graves,” he said.

The I.T. Alliance study estimates that up to €5bn of public money could be wasted as a result of poor implementation of projects in general. Last month a study by ESRI called for all projects to be transparently evaluated. “With €70bn due to be invested in the next National Development Programme it is essential that basic procedures are taken to minimise waste of tax payers’ money,” commented O’Donnell.

In its report, I.T. Alliance outlined several common reasons why projects fail: badly defined requirements and poorly stated objectives; poor or non-existent governance structures; poor stakeholder management; inadequate communications planning; inaccurate initial estimates; or poor project management.

“There are others which could be added to this list but if two or three of these exist then call the undertaker,” O’Donnell remarked. “There is some hope if best practice, proper accountability and governance are a focal point of the early planning of projects. Collectively, we have to address this if any lessons are to be learned.”

O’Donnell is recognised as one of the foremost experts on project management in Ireland, with extensive experience in both the public and private sectors. He was formerly director of the Centre for Project Management at the University of Limerick and continues to work there in a consultative role. He previously worked at Compaq/Digital and prior to this he held a post with North Eastern Health Board. Tomorrow he will be presenting a paper entitled ‘Managing Large Projects’ at the Annual Irish Project Management Conference in Limerick.

By Gordon Smith